27.10.2011

Terex Cranes up 47%

Terex Cranes has posted a strong third quarter with sales up 47.4% while profits increased more than 650 percent.

First of all looking at the year to date numbers, crane revenues for the nine months to the end of September were $1.4 billion – 14 percent higher than a year ago. Operating profits collapsed though plunging from a $17.8 million profit to a loss of $30.6 million. The loss as mentioned at the half year is mostly due to pre-tax restructuring and other one off charges of around $36 million related to cost reduction and manufacturing rationalisation.

Looking at the latest quarter it is a completely different picture, revenues climbed 47.4 percent to $543.6 million, while operating income grew by a multiple of 6.65 from $3.9 million last year to $25.9 million this year.

The crane order book at the end of September was eight percent higher than this time last year at $776.6 million, but down 15 percent from the end of June, as improved production allowed the company reduce delivery times on some larger cranes.

Terex says that it experienced increased sales in almost every crane category, compared to the same quarter last year, with straddle carriers, Rough Terrain cranes and boom trucks showing the strongest growth in the latest quarter. Sales in the USA more than doubled and stronger demand also occurred in China, India and Germany, but as already reported the Terex truck crane business in China suffered a significant decrease in demand.

Terex overall

Terex as a whole reported total revenues of $4.54 billion for the nine months, 47 percent up on the same period last year. Pre-tax profits for the period were $94 million compared to a loss in the first nine months of 2010 of $200.7 million. The third quarter was similar with sale up almost 67 percent to $1.8 billion, while pre-tax profits were $67.3 million compared to a loss in the same period last year of $51.2 million.

Demag industrial cranes and port equipment was included for almost two months of the quarter and contributed $256 million in revenues along with an operating loss of $2.6 million, due to charges of $19.3 million related to the revaluation of inventory and $5 million to the amortisation of re-valued assets.

Terex chief executive Ron DeFeo said: “Overall, our performance continues to improve in terms of net sales and operating profitability, even during this economically uncertain time. We continue to see end-market demand recover in our Aerial Work Platforms business. Cranes saw an improved production execution allowing us to deliver orders from our backlog of larger mobile cranes and port equipment while margins improved both as a result of higher sales volumes and reduced costs from the restructuring announced earlier this year.”

“Additionally, we strengthened our company this quarter with the addition of Demag Cranes AG. We own approximately 82 percent of the outstanding shares of Demag and have begun negotiations of a domination and profit and loss transfer agreement. While this is not expected to be completed until 2012, we have commenced an integration planning process involving the management teams of both businesses.”

“We anticipate that our net sales for the year will be in the range of $6.3 to $6.5 billion, including the Material Handling & Port Solutions segment (Demag).”

“Our longer term outlook is for continued growth in many of our key product categories and end markets. While we are mindful of the continuing economic uncertainty, we continue to believe that the overall market conditions support growth led by our AWP business, mainly in North America, and our Port Equipment business globally. As a result of price increases which we will be instituting, as well as cost saving initiatives across our businesses, we anticipate increases in profitability to outpace our growth in net sales.”

Vertikal Comment

It is encouraging to see the Terex Crane business bounce back so soon after it the industry started to slide as the recession finally began to bite. These numbers along with those of Manitowoc, earlier this week, are positive signs of a sustainable crane market recovery.

Terex however is taking a more quirky approach with the design of its smaller new products, than its two main rivals. It is way too soon to judge the success or not of this approach. It is either ahead of the game by the right degree to do well, or too far out in its design concepts to win over what can be quite traditional buyers.

By this time next year we will have a clearer indication. In the meantime the business is shaping up for a strong year in 2012.